Published on 12 Apr 2021 Time 14 min read Last update by 19 Dec 2023

Top 50 Franchise Failures You Need to Avoid (Failure Rate)

franchise failures

Did you know 4,000 Subway franchises failed in less than three years? Or that the pharmacy giant, Health Mart had 2,000 franchise failure in the same time period?

Before you buy a franchise it is essential you receive information not just from the person or company selling you the franchise business.

Although the process of buying a franchise can seem overwhelming, we at Vetted Biz are dedicated to helping you navigate it. We take pride in providing accessible, accurate data and information to the U.S. entrepreneur community, all in order to determine which franchises are and are NOT worth buying..

Contents

How We Determine the Failure Rate for a Franchise

One method of determining the viability of a franchise is taking into account recent closures. Both in terms of the number of closures and closure rates. Through comprehensive analysis of more than 1,500 franchises, we at Vetted Biz have come up with the top 50 franchise failure.

The data was compiled by summing the franchise failures over a three year period (either 2016-2018 or 2017-2019 depending on data available).

Failure Rate

Franchise Failure Calculation

Franchise failure comprise franchise terminations, franchise non renewals and franchises that ceased operations for other reasons. All of these metrics are accessible in Item 20 of the Franchise Disclosure Document (FDD). The FDD is a uniform document regulated by the FTC. All franchisors selling franchises must update their FDDs at least once a year.

Franchise Failure Terminology Defined

Franchise terminations occur when the franchisor cancels the agreement before the end of the term (generally 10 years). Due to the contractual nature of the franchisor/franchisee agreement, franchise terminations generally do not occur without an explicit outstanding reason. Such as something as serious as fraud.

Franchise non-renewals, on the other hand, occur at the end of the franchise term and can occur for any number of reasons. The Franchisee might no longer see the value in the brand and prefer the run the location as an independent business.

The last metric of franchise failures is the number of franchises that ceased operations for other reasons. This is the broadest of the three categories, and a point of concern because it could be an indicator of franchise bankruptcy.

 

Top 50 Franchises Failures

subway failure

1) Subway

Subway Franchise Failures (2017-2019): 4,148

Description: Subway offers foot-long and other sandwiches, salads and other food items from a retail store. Subway is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 23,802

Jazzercise

2) Jazzercise

Jazzercise Franchise Failures (2017-2019): 2,061

Description: Jazzercise offers franchises the opportunity to operate as an instructor of a dance fitness program. Jazzercise is a franchise concept in the Fitness Centers industry.

U.S. Franchised Locations (2019): 6366

Coverall Franchise

3) Coverall

Coverall Franchise Failures (2017-2019): 1,986

Description: Coverall provides cleaning and maintenance services with a “health-based” model for office, commercial, and medical facilities. Coverall is part of the Cleaning and Maintenance Services industry.

U.S. Franchised Locations (2019): 5,022

Health Mart franchise failure

4) Health Mart 

Health Mart Franchise Failures (2017-2019): 1,978

Description: Healthmart is an independent pharmacy franchise and one of the largest chain drug stores in the US, with more than 5,000 establishments nationwide. Healthmart is in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 5,010

franchise failures

6) Advanced Fresh Concepts

Advanced Fresh Concepts Franchise Failures (2017-2019): 1,610

Description: Advanced Fresh Concepts is a supermarket-based food service counter concept that offers sushi and other Asian cuisine items. Advanced Fresh Concepts is in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 3,849

Good Neighbor Pharmacy Franchise failure

7) Good Neighbor Pharmacy

Good Neighbor Pharmacy Franchise Failures (2017-2019): 1,414

Description: Good Neighbor Pharmacy is a network of retail pharmacies that are independently owned and operated. Good Neighbor Pharmacy is in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 1,167

Liberty Tax failure

8) Liberty Tax Service

Liberty Tax Franchise Failures (2017-2019): 1,365

Description: Liberty Tax Service offers various tax preparation and accounting services to their business clients. Liberty Tax Service is a franchise concept in the Business Services industry.

U.S. Franchised Locations (2019): 5,068

MicrosoftTeams image 4

 

Bimbo Bakeries Franchise failure

9) Bimbo Bakeries

Bimbo Bakeries Franchise Failures (2017-2019): 839

Description: Bimbo Bakeries is a franchise concept that sells baked goods and other bakery products. Bimbo Bakeries is part of the Food and Beverage industry.

U.S. Franchised Locations (2019): 5,953

Jackson Hewitt Franchise failure

10) Jackson Hewitt

Jackson Hewitt Franchise Failures (2017-2019): 916

Description: Jackson Hewitt provides tax and accounting services to their clients. Jackson Hewitt is a franchise concept in the Business Services industry.

U.S. Franchised Locations (2019): 3,922

n2 publishing failure

11) N2 Publishing

N2 Publishing Franchise Failures (2017-2019): 827

Description: N2 Publishing is a company that sells “neighborhood publications”, or newsletters that introduce neighbors to recently moved residents of upscale areas. N2 Publishing is a company in the Business Services industry.

U.S. Franchised Locations (2019): 882

Curves Franchise failure

12) Curves

Curves Franchise Failures (2017-2019): 615

Description: Curves is a women’s health and fitness club that focuses on both upper body and lower body strength. Curves is a franchise concept in the Fitness Centers industry.

U.S. Franchised Locations (2019): 295

Matco Tools Franchise failure

13) Matco Tools

Matco Tools Franchise Failures (2017-2019): 665

Description: Matco offers franchises the opportunity to operate a mobile business selling professional quality mechanics’ tools and service equipment. Matco Tools is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 875

Pizza Hut Traditional Franchise failure

14) Pizza Hut Traditional

Pizza Hut Traditional Franchise Failures (2017-2019): 626

Description: Pizza Hut Traditional provides franchises the opportunity to operate restaurants offering pizza, pasta and WingStreet chicken products and side dishes in a traditional location. Pizza Hut Traditional is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 5,953

Vision Source Franchise failure

15) Vision Source

Vision Source Franchise Failures (2017-2019): 561

Description: Vision Source is an independent practice of optometry through a network of independently owned and operated optometric offices. Vision Source is a franchise concept in the Healthcare Services industry.

U.S. Franchised Locations (2019): 3,250

franchise failures

16) Cruise Planners

Cruise Planners Franchise Failures (2017-2019): 536

Description: Cruise Planners offers franchisors the opportunity to operate a travel agent business, specifically in regards to cruise trips. Cruise Planners is a franchise concept in the Travel and Hospitality industry.

U.S. Franchised Locations (2019): 3,113

Papa Johns Franchise

17) Papa Johns

Papa Johns Franchise Failures (2017-2019): 518

Description: Papa John’s sells franchises that operate a quick service restaurant specializing in pizza and limited additional menu items. Papa John’s is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 2,544

Pizza Hut Non Traditional Franchise

18) Pizza Hut Non Traditional

Pizza Hut Non Traditional Franchise Failures (2017-2019): 500

Description: Pizza Hut Non Traditional refers to unorthodox business models that sell Pizza Hut products, such as mall kiosks, retail counters, sit down restaurants, and mini kitchens. Pizza Hut Non Traditional is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 1,440

franchise specialist

Burger King Franchise

19) Burger King

Burger King Franchise Failures (2017-2019): 463

Description: Burger King is a fast food restaurant chain that primarily sells hamburgers, fries, soft drinks, and other related goods. Burger King is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 7,294

worst fast food chains

20) McDonald’s

McDonald’s Franchise Failures (2017-2019): 431

Description: McDonald’s provides franchises the opportunity to operate a quick service restaurant offering a limited menu of value-priced foods. McDonald’s is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 13,185

Century 21 Franchise

21) Century 21

Century 21 Franchise Failures (2017-2019): 391

Description: Century 21 provides services to their clients in regards to property listings, houses for sale, real estate agents, and a mortgage calculator. Century 21 is a franchise concept in the Real Estate industry.

U.S. Franchised Locations (2019): 2,089

Chem-Dry Franchise

22) Chem-Dry

Chem-Dry Franchise Failures (2017-2019): 393

Description: Chem-Dry is a franchise in the Home Services industry that features carpet cleaning, upholstery, and other authorized services to residential and commercial customers.

U.S. Franchised Locations (2019): 2,000

worst fast food chains

23) Dunkin Donuts

Dunkin Donuts Franchise Failures (2017-2019): 389

Description: Dunkin’ offers franchises to operate restaurants featuring Dunkin’ coffee, donuts, bagels and other related food items and beverages. Dunkin’ is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 8,292

Quiznos Franchise

24) Quiznos

Quiznos Franchise Failures (2017-2019): 375

Description: Quiznos provides submarine and other sandwiches, salads, soups, soft drinks, and related products. Quiznos is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 306

Chester's Franchise

25) Chester’s 

Chester’s Franchise Failures (2017-2019): 364

Description: Chesters is a quick-service chicken and sides restaurant located within a supermarket, convenience store, or other non-traditional location. Chester’s is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 1,226

franchise failures

26) Cruiseone

CruiseOne Franchise Failures (2017-2019): 332

Description: CruiseOne offers personalized travel services specifically for cruise type vacations. CruiseOne is a franchise concept in the Travel and Hospitality industry.

U.S. Franchised Locations (2019): 1,280

Cellairis Franchise

27) Cellairis

Cellairis Franchise Failures (2017-2019): 323

Description: Cellairis is a company that provides cell phone repair services and sells screen protectors, phone cases, and other cell phone related products. Cellairis is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 211

Cornwell Quality Tools

 28) Cornwell Quality Tools

Cornwell Quality Tools Franchise Failures (2017-2019): 311

Description: Cornwell Quality Tools offers franchises the opportunity to purchase, resell and service products for the automotive and aviation industries. Cornwell Quality Tools is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 689

Serendipity Labs Franchise

29) Serendipity Labs

Serendipity Labs Franchise Failures (2017-2019): 297

Description: Serendipity Labs is a company that leases office space and shared workspaces to their customers. Serendipity Labs is a franchise concept in the Travel and Hospitality industry.

U.S. Franchised Locations (2019): 3,104

 

Mac Tools Franchise

30) Mac Tools

Mac Tools Franchise Failures (2017-2019): 296

Description: Mac Tools provide franchises the opportunity to operate a business involving the mobile sale of professional automotive tools and similar products. Mac Tools is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 687

Miracle Ear Franchise

31) Miracle-Ear

Miracle Ear Franchise Failures (2017-2019): 277

Description: Miracle-Ear is a hearing aid business which sells a complete line of quality hearing aids and certain related products and services. Miracle-Ear is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 1,452

KFC Traditional Franchise

32) KFC Traditional

KFC Traditional Franchise Failures (2017-2019): 265

Description: KFC offers franchises the opportunity to operate a dine-in and carryout KFC outlet selling chicken and other menu items. KFC Traditional is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 3,980

Dickey's Barbecue Pit Franchise

33) Dickey’s Barbecue Pit

Dickey’s Barbecue Pit Franchise Failures (2017-2019): 264

Description: Dickey’s Barbecue Pit offers freshly prepared barbecue style meats and other food products. Dickey’s Barbecue Pit is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 502

Tire Pros Franchise

34) Tire Pros

Tire Pros Franchise Failures (2017-2019): 252

Description: Tire Pros is an auto repair franchise that provides tire repair and replacement services. Tire Pros is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 618

Management Recruiters International Franchise

35) Management Recruiters International

Management Recruiters International Franchise Failures (2017-2019): 243

Description: Management Recruiters International provides talent searching and talent finding services for businesses looking to hire their next executives and management. Management Recruiters International is a franchise concept in the Business Services industry.

U.S. Franchised Locations (2019): 292

Great Clips Franchise

36) Great Clips

Great Clips Franchise Failures (2017-2019): 241

Description: Great Clips provides franchises the opportunity to operate a Great Clips Salon offering a required line of haircare services and products. Great Clips is a franchise concept in the Health and Beauty industry.

U.S. Franchised Locations (2019): 4,473

H&R Block Franchise

37) H&R Block

H&R Block Franchise Failures (2017-2019): 240

Description: H&R Block is a tax return preparation business and can offer bookkeeping and payroll services. H&R Block is a franchise concept in the Business Services industry.

U.S. Franchised Locations (2019): 2,886

Kumon Franchise

38) Kumon

Kumon Franchise Failures (2017-2019): 232

Description: Kumon offers franchises the opportunity to operate an after-school center that provides math and reading programs using the Kumon Method of learning. Kumon is a franchise concept in the Education Programs industry.

U.S. Franchised Locations (2019): 1,547

franchise advisor

Renaissance Hotels Franchise

39) Renaissance Hotels

Renaissance Hotels Franchise Failures (2017-2019): 232

Description: Renaissance Hotel operates a full-service, luxury hotel that combines comfort and style to provide an exceptional customer experience. Renaissance Hotels is a franchise concept in the Travel and Hospitality industry.

U.S. Franchised Locations (2019): 3,113

Red's Savoy Franchise

40) Red’s Savoy

Red’s Savoy Franchise Failures (2017-2019): 232

Description: Red’s Savoy Pizza sells specialty and create your own pizzas, wings, breads, salads, pasta, beverages, and more related items. Red’s Savoy is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 3,113

Papa Murphy's Franchise

41) Papa Murphy’s

Papa Murphy’s Franchise Failures (2017-2019): 226

Description: Papa Murphy’s is a take and bake pizza company where they sell pre-made pizzas to their customers for them to cook on their own time. Papa Murphy’s is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 1,256

Long John Silver's Franchise

42) Long John Silvers

Long John Silver’s Franchise Failures (2017-2019): 225

Description: Long John Silver’s is a restaurant chain that specializes in seafood fast food, mostly fish and shrimp products. Long John Silvers is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 545

Smile Source Franchise

43) Smile Sources

Smile Source Franchise Failures (2017-2019): 225

Description: Smile Source offers routine dental treatments, conducting exams to diagnose extensive implant, cosmetic and orthodontic health problems. Smile Source is a franchise concept in the Healthcare Services industry.

U.S. Franchised Locations (2019): 734

Auntie Anne's Franchise

44) Auntie Anne’s

Auntie Anne’s Franchise Failures (2017-2019): 217

Description: Auntie Anne’s offers franchises the opportunity to operate a retail shop featuring baked soft pretzels, lemonade, and related food and beverage items.  Auntie Anne’s is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 1,200

7-Eleven Franchise

45) 7-Eleven

7-Eleven Franchise Failures (2017-2019): 217

Description: 7-Eleven offers franchises the opportunity to operate an extended-hour retail convenience store selling a broad array of products. 7-Eleven is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 7,213

Rodeway Inn Franchise

46) Rodeway Inn

Rodeway Inn Franchise Failures (2017-2019): 212

Description: Rodeway Inn is a chain of low-priced lodging accommodations throughout the US and Canada. Rodeway Inn is a franchise concept in the Travel and Hospitality industry.

U.S. Franchised Locations (2019): 600

Coffee News Franchise

47) Coffee News

Coffee News Franchise Failures (2017-2019): 208

Description: Coffee News is a weekly advertising publication and is mainly delivered to restaurants, coffee shops, and other small businesses/local dining establishments. Coffee News is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 335

Merle Norman Cosmetics Franchise

48) Merle Norman Cosmetics

Merle Norman Cosmetics Franchise Failures (2017-2019): 207

Description: Merle Norman Cosmetics is a cosmetics company that manufactures and sells makeup, skincare, and personal care products. Merle Norman Cosmetics is a franchise concept in the Retail Products and Services industry.

U.S. Franchised Locations (2019): 1,002

worst fast food chains

49) Applebee’s

Applebee’s Franchise Failures (2017-2019): 206

Description: Applebee’s is a casual table service restaurant that offers food and alcoholic beverages. Applebee’s is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 1,600

Jimmy John's Franchise

50) Jimmy John’s

Jimmy John’s Franchise Failures (2017-2019): 206

Description: Jimmy John’s offers franchises to operate a restaurant featuring gourmet deli sandwiches, fresh-baked breads, and other food and beverage products. Jimmy John’s is a franchise concept in the Food and Beverage industry.

U.S. Franchised Locations (2019): 2,738

Franchise Failure Conclusion

Are you surprised to see so many recognizable brands on the list?

Many of the businesses featured on the above list are the biggest names in their industry.

It is important to note that this list only comprises the number of failures, without taking into account how this number relates to the size of the entire franchise system. For example, while McDonalds ranks high up on the list, in comparison to the current number of establishments they have in the US, the number of franchise failures in relation to franchise successes is minimal.

Nevertheless, franchise failure are a useful indicator of franchise success especially for smaller, more local franchises.

If a lesser known brand has an unusually high number of franchise failures, this is something to be wary of. It is also important to cross reference with other metrics like the failure rate, stability rate, growth rate and SBA Loan Success Ratio.

Were you expecting to see any of these franchises on this list? Think you may need some outside help before choosing a franchise or business to invest in? We at Vetted Biz are here to help!

See how our professionals can help power your franchise search and analysis today.

 

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